If you expect to retire in 30 years, are currently comfortable living on $50,000 per year and expect inflation to average 3% over the next 30 years, what amount of annual income will you need to live at the same comfort level in 30 years?
A) $121,363
B) $95,000
C) $20,599
D) $51,500

Question

Quizplus · Accepted Answer

To calculate the amount of annual income needed to maintain the same comfort level in 30 years, we need to account for the impact of inflation. Using the inflation formula, we can calculate the future value of $50,000 after 30 years:

FV = PV x (1 + i)^n

FV = future value
PV = present value
i = inflation rate
n = number of years

FV = $50,000 x (1 + 0.03)^30
FV = $50,000 x 2.427
FV = $121,363

Therefore, the answer is A) $121,363.

If You Expect to Retire in 30 Years, Are Currently